“Mark Dain admits that he headed up a massive real estate fraud scheme, of the “no money down” variety, which scammed hundreds of Northern Virginia residents and cost banks millions of dollars. He sold vacant lots in North and South Carolina in 2006 and 2007, with the promise that they could be quickly flipped for easy profits, and it all collapsed with the real estate market. It’s been called the biggest real estate scam in North Carolina’s history.

Dain pleaded guilty to a conspiracy charge in July. His sentencing is Friday. The probation office calculates that Dain should face a sentence of 87 to 108 months in prison. But on Monday, federal prosecutors recommended that Dain be sentenced to just 26 months in prison. Then, on Tuesday, prosecutors amended their recommendation: Dain, the ringleader of the operation, should serve 18 months in prison. That would be less than the sentences imposed on three of Dain’s employees in his Woodbridge-based company, Total Realty Management, which prosecutors finally identified by name for the first time in their sentencing memos this week.

The U.S. attorney’s office in Alexandria did not return requests for comment or explain why it dropped its recommendation from 26 months to 18 months. Dain apparently has been cooperating with a federal investigation of his scam for three-and-a-half years, and prosecutors filed a separate memo under seal explaining why he should serve less time than the people he oversaw.

Dain’s scam began with recruiting pitches around Northern Virginia, many using his former Chantilly High School football coach, the widely respected Danny Meier. Dozens of teachers and school administrators signed up to buy a piece of land, with no payments due for two years because TRM was already collecting huge profits from the sale of the land and making the monthly interest-only. A fellow speculator, Michael McCracken, told U.S. District Judge T.S. Ellis III in 2011 that the bank loan officers were well aware of the scheme, which involved falsifying loan applications and assets of the teachers and other investors. About 500 lots were sold, for prices ranging from $300,000 to $400,000, in three planned developments, including two near Topsail and Emerald islands in North Carolina.

Land values collapsed in 2007, and the lots became worth $10,000 to $15,000. The Northern Virginia buyers were stuck. Civil suits were launched in Virginia and North and South Carolina, eventually yielding settlements for many of the buyers that extricated them from the mortgages. But Dain and his main partner, Mark Jalajel, were never charged with a crime. Jalajel remains uncharged to this day.

But former employees were charged, including Aaron V. Hernandez, a former TRM employee who started his own company and used the same scheme. In May 2010, he pleaded guilty to conspiracy and was sentenced to five years in prison. In July 2010, TRM employee Cari Deuterman pleaded guilty and received 24 months. Christopher Tonkinson, another TRM employee, also received 24 months. McCracken was sentenced to 40 months.

Also in 2010, according to his sentencing memorandum, Dain “became a born-again Christian and now lives his everyday life by the teachings of Jesus.” Before 2010, the memo by attorney Michael T. Pritchard states, “Mr. Dain admits he lived an immoral life, both personally and professionally. He made many mistakes. He broke the law. His actions hurt people.” So after the high-flying period in 2006 and 2007 when Dain was imploring bank officials to help him acquire great wealth by approving fraudulent loans, he spent another three years with the profits from the scam before realizing “he made many mistakes.”
Pritchard did not return a request for comment.

Dain turned himself in after his guilty plea in July. Pritchard’s memo asks Judge Ellis to sentence Dain only to time already served, or three months or, alternatively, less than 12 months with all time to be served in home or community confinement. Couldn’t hurt to ask. When Dain finishes his sentence, Pritchard wrote, “he plans to pursue a career in the ministry to share his story with hopes of inspiring others to live a virtuous life.”

Dain has been assisting the government for three-and-a-half years, Pritchard’s memo states. “He would drop everything if the government called and be there at a moment’s notice,” Pritchard wrote. “He sacrificed his time to assist the government because it was the right thing to do.” At the time of McCracken’s arrest in 2010, investigators revealed that ”the majority owner of TRM” was a cooperating witness and wore a wire to capture a conversation at McCracken’s home.

But what will the three-and-a-half years of cooperation by Dain lead to? He and Jalajel were disciples of Ron LeGrand, founder of the “No Money Down” movement, who has been linked to TRM in another failed South Carolina project with the same characteristics. Bank of America was particularly active with TRM in North Carolina and was a defendant in lawsuits claiming it was involved in Dain’s scams, although it is also listed as a victim in Dain’s case, along with BB&T, Carolina First and SunTrust Bank. Is the government targeting any of these folks, six years after it all went belly up?

Judge Ellis may well ask Dain about this, and more, at the sentencing hearing. It is set for Friday morning at 9 a.m.”

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.